TDS limit for dividend income hiked from current Rs 5000 in Budget 2025: small shareholders to benefit
Budget 2025 proposes to increase the Tax Deducted at Source (TDS) threshold for dividend income from Rs 5000 to Rs 10,000 in a particular financial year. This amendment will take effect from April 1, 2025.
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The Finance Minister said, “It is proposed to provide that no tax is required to be deducted when the amount or aggregate of amounts of such dividend, distributed or paid or likely to be distributed or paid, to the shareholder, being an individual, does not exceed Rs 10,000.”
Section 194 of the Act requires that the principal officer of an Indian company or a company which has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) within India, shall, before making any payment by any mode in respect of any dividend or before making any distribution or payment to a shareholder, who is resident in India, of any dividend within the meaning of all sub-clauses of clause (22) of section 2, deduct from the amount of such dividend, income-tax at the rate of 10%.
The first proviso to this section states that no tax is required to be deducted when the amount or aggregate of amounts of such dividend, distributed or paid or likely to be distributed or paid, during the financial year by the company to the shareholder, being an individual, does not exceed Rs.5,000/-. 3. It is proposed to provide that no tax is required to be deducted when
